Is the Next Great Crisis Investing Opportunity Taking Shape?

A friend of mine told me this on Friday night. We were at a charity event in Recoleta, a neighborhood in Buenos Aires, Argentina.

My friend, of course, was talking about the International Monetary Fund (IMF).

The IMF is an organization that “aims to promote global economic growth and financial stability, to encourage international trade, and to reduce poverty.” And it attempts to do so by lending money to countries with shaky finances.

During the 1990s, Argentina borrowed billions from the IMF in an effort to help its struggling economy. But the country fell behind on its payments. Eventually, Argentina was crushed under the weight of its own debt.

It defaulted on around $100 billion in debts in 2001. It was the largest sovereign default in history. The Argentine peso plummeted in value—destroying the currency—and millions of Argentines lost everything.

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This is why some Argentines don’t like talking about the IMF. It brings back bad memories.

Of course, you’re probably wondering how we got on this obscure topic. After all, it’s not what most people talk about when they’re sitting at the bar.

Well, the answer is simple really…

• Argentina is trying to secure a $30 billion loan from the IMF…

And it’s doing this because Argentina’s economy is in big trouble.

Just look at the Argentine peso. It’s in free fall.

You can see that the peso fell nine trading days in a row against the U.S. dollar. Yesterday, it finally snapped that losing streak. But it’s still down 23% against the U.S. dollar this year. That makes it one of the worst-performing currencies on the planet.

As a result, inflation is soaring in Argentina. In fact, the government just reported that prices for goods and services in the country are 25% higher than they were a year ago. And that’s taking a toll on everyday Argentines.

It’s already unloaded about $8 billion in international reserves in an effort to prop up the peso.

It also raised its key interest rate three times in eight days in a desperate attempt to attract capital. Its key rate is now at 40%. That’s 24 times higher than the Federal Reserve’s key interest rate.

And of course, it’s asking the IMF for money again.

In short, government officials are in full-blown panic mode. That’s why many locals, like my friend, are so nervous.

• Unfortunately, I can’t tell you if these emergency measures will work…

After all, the details of the IMF loan are still being sorted out in Washington.

But I am keeping an extremely close eye on this situation. And that’s because Argentine stocks could emerge from all this as a great crisis investing opportunity.

To understand why, look at this chart… It shows the performance of the Global X MSCI Argentina ETF (ARGT) over the past year.

You can see that Argentine stocks are in free fall right now. In fact, ARGT is already 20% off its highs.

In today’s world, that’s a bargain. Of course, things in Argentina could get much uglier before they get better. So, I wouldn’t bet on these stocks yet.

Instead, I’m going to watch this situation play out from the sidelines—or rather, from my front-row seat in Buenos Aires. I’ll also be sure to let you know if a buying opportunity presents itself. So stay tuned.

Regards,

Justin Spittler
Buenos Aires, Argentina
May 16, 2018

P.S. I also encourage you to read this essay that I wrote recently about Argentina. In it, I explain why some Argentines could turn to bitcoin (yes, bitcoin) if the situation doesn’t improve.

P.P.S. Below, I hand it off to John Hunt, Doug Casey’s coauthor in the High Ground novel series, who has a brand-new essay…

Mr. Sociopath Goes to Washington

By John Hunt, MD

Natural laws are the laws that, if followed, promote the survival and thriving of humans. Natural laws are like laws of physics. We humans don’t write natural laws… We discover them. These contrast with civil laws that are written by humans. One of the natural laws is: Don’t initiate force or fraud against another person. Another is: Do what you agree to do. Adherence to natural law, by definition, promotes the thriving of individuals and the human species. In contrast, defying natural law leads to distrust, war, and death.

Sociopaths constitute 1–3% of the population. Sociopaths are characterized by a disregard for the rights of others, a lack of empathy and remorse, a willingness or eagerness to lie, no conscience, little impulse control, little care about cause and effect, and a desire to exploit others and to control them. They blame others when the faults are their own. They are narcissistic, defensive, manipulative, callous, and hostile.

How do sociopaths survive, then, living as they do in such defiance of natural law? The answer, I propose, is that sociopaths have written so many of the civil laws. They’ve been able to do so by finding an easy niche in the world of politics.

Government holds the monopoly on the legal power to initiate force against the innocent. In other words, government has given itself the legal right to break natural law. Sociopaths live their lives defying natural law. You can see how politics (the control of government) is therefore a safe and attractive home for sociopaths.

Normal people like to control how nature affects them. Normal people fight entropy, keep out of the rain, put food in their bellies, and by so doing, create value in the world for themselves and others. Sociopaths are different. It’s not nature’s effects that they try to control. Sociopaths like to control people. Worse, the distorted reward mechanism in their brains causes sociopaths to be neurologically incentivized to cause harm to other people. And how can one cause harm to people and get away with it? Again: by gaining political power.

In addition to their magnetic attraction to politics, sociopaths possess a set of strengths that help them be successful politicians. They can be charismatic and are highly convincing liars. Lie about their political opponent? No problem. Lie about themselves? No problem. Perhaps bribe, extort, blackmail, or even kill a few people on the way up? No problem.

Sociopaths are great liars who have a desire to control people. Politics is the nexus of both the sociopath’s strength and his desire. Republican or Democrat? Matters not. The sociopath can lie their way through any election.

I wrote recently about the removal of neutral, unbiased people from the climate science community through a process of multiple distillation, and how that could lead to laypeople receiving biased information regarding the very important issue of our shared climate. Such distillation and bias occurs in many fields. Politics follows a comparable pattern of distillation, but one in which sociopaths become increasingly concentrated (distilled) within the halls of Congress (and state and local governments, too).

This distillation of the political class into one dripping with sociopathy is accomplished through several layers.

People desire to go into politics for many reasons. I will categorize them into five groups, the first four of which are all jerks:

Category A politicians think that they have the best answers. They believe that they are wiser, smarter, and better than you. They seek power in order to institute their fixes. They will use threats of force and actual force (guns) to assure that you comply with their brilliance. In other words, as a matter of course, they are eager to use the very process that starts all wars—the initiation of force—as their way to accomplish their goals. Obama provides a good example with his compulsory medical insurance, but there are many others in the headlines regularly. The morality of these politicians is that their chosen ends justify the means.

Category B politicians are sociopaths. They want to achieve power over others in order to parasitize off society or cause outright harm. There are multiple obvious examples like Hitler, Stalin, Pol Pot, and many others who are less blatant, but constantly in the news vying for power over others. These people are immoral to the core. Sociopaths are quite at home in the toxic environment of the swamp, and I expect that they swim in its lower depths as well—what is called the Deep State.

Category C politicians believe government “service” to be a lucrative career financially, or a stepping stone to one. Such people are a waste of food.

Category D politicians thrive on attention or think they will earn community respect through politics. These folks have no identifiable ideology. President Trump seems to fit this bill. They may be grandiose and narcissistic.

Category E politicians are the rarest breed. They seek power only to protect their freedom against the injuries caused by the previous four categories of politicians. They maintain hope that the political process might be useful to stop the bad politicians from wreaking havoc. Ron Paul is a good example.

Most aspiring politicians fall into categories A through D. So the first massive distillation step occurs: Most people who choose to run for office are the type of people who should not be given power.

Category A politicians often justify lying, as needed, to accomplish their perceived greater good. In contrast, the sociopaths (Category B) lie outright and need no justification to lie. They just do it. Stated with assurance and backed by the media, their lies gain the support of the uninformed, mal-informed, and ideologically disabled population, which then supports, contributes, and votes for them. Sociopaths out-lie the aspiring politicians from the other politician categories. This improves their election chances and concentrates their ranks further in the political sphere. This is the second distillation step that concentrates sociopaths in politics.

Once successfully elected into the world of politics, the politician is immersed in a group of colleagues who are culled from among the various groups of political wannabes above—cocky narcissists, crony leeches, and sociopaths. They have to mingle and try to make agreements and compromises with these untrustworthy people. This may be a sociopath’s nirvana, but the good, Category E politicians usually can’t endure such miasma for very long, and are thus more than likely to flee the political swamp once they have maxed out their tolerance for those who live in it. This attrition removes most of the good guys and leaves mostly the jerks in politics.

Although some flies and vermin from Categories C and D linger, politics becomes predominantly a battleground between Category A and Category B politicians: a battle between those who will force their will upon you versus those who want to parasitize off you.

Overall, we have a system that attracts and then concentrates the very worst sort of people into positions of power. Yes, we have an opportunity to vote them out of office; but over the decades, these people have been able to rig the system to reinforce their power. They now control the regulatory regimes, the criminal justice system, the medical system, the retirement system, and support the fiat monetary system. They feed the crony-state. Most importantly, they control the education-indoctrination complex. They nurture divisions along racial and class lines. They promote insane economic notions. They start wars. They take away freedom. They make the laws.

It’s not a conspiracy. It’s simply what happens when we allow government to grow. Washington has grown until it has become intensely attractive to the worse sort of semi-human scum.

Is it any wonder that Congress is despised? Is it any wonder that it is essentially impossible to obtain justice at the national level? Is it any wonder that government has become a threat to liberty instead of a protector of it? Is it any wonder that government defies the laws of nature?

Government is a system that attracts the worst sort of people. And the effects of it are going to be bad, no matter what political party is running things. Relying on the political process to solve problems makes no sense and doesn’t work. Americans—regardless of party or priority—need to learn to solve each problem, not through the coercive mechanisms of government, but through voluntary cooperation of the people who choose to care about each problem. By using voluntary, moral means to solve our problems—instead of relying on government—we will disempower the sociopaths and other jerks.

Disempowering the jerks should be a goal anyone but a jerk can support.

[In this commentary, I am collectivizing sociopaths into one group. But they are not all alike. We need to judge each sociopath individually, and I apologize in advance to any sociopath who has kept his proclivities in check.]

Best regards,

John Hunt, MD

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